(The following story by Lindsay Peterson appeared on The Tampa Tribune website on January 23.)
TAMPA, Fla. — In January 2006, the Florida Department of Transportation hit a snag negotiating a nearly half-billion-dollar deal with CSX Transportation, so then-DOT Secretary Denver Stutler turned to a longtime rail industry executive for advice.
That executive, Earl Durden, was a member of the Florida Transportation Commission, the DOT oversight agency. Ten months earlier, he chaired the commission when it approved a DOT plan that set aside money for CSX – a plan that also contained more than $6 million for a railroad Durden owned.
State law prohibits transportation commissioners from taking part in specific DOT operations, such as awarding contracts and selecting consultants. It also bans commissioners from having a financial interest in any DOT contract or benefit during the commissioner’s term or for two years afterward.
DOT officials say Durden’s role with CSX and the plan that financed his rail improvements did not violate any laws. In both cases, they say, he provided only general advice and didn’t get involved with specific projects or funding questions.
In the CSX case “it would make sense for the department to discuss a ‘big picture’ overview of the entire proposal” with transportation commission members, said DOT spokesman Dick Kane.
Stutler described his discussions with Durden as “talking at the 40,000-feet level.”
A DOT e-mail written in early 2006 appears to contradict that, however. The e-mail, which is a public record, shows that Durden attended a meeting with Stutler and CSX Chief Executive Officer Michael Ward at which specific issues were discussed.
Its writer, DOT rail office administrator Fred Wise, began with a review of an earlier meeting, whose participants Wise didn’t name.
“We made substantial progress in our 12/15 discussions in Jacksonville and agreed to a nominal $500 million deal” with CSX, he wrote to an assistant. And on Jan. 20, he wrote, Stutler and Durden met with Ward. Also attending was Orlando lawyer David Brown, a former transportation commissioner and fundraiser for then-Gov. Jeb Bush.
They discussed specific issues, according to Wise, including “the possibility of federal funding … to reduce merchandise train traffic in the corridor, property tax holding CSX to 2005 levels and ILC Access.”
The ILC, or intermodal logistics center, is a major hub CSX plans to build in Polk County. In its nearly half-billion-dollar deal with CSX, the state would help the railroad expand its freight operations and build roads into the hub after buying CSX tracks in the Orlando area for a commuter rail corridor.
Wise also wrote in his e-mail on the Jan. 20 meeting, “CSX and FDOT agreed to a goal of having an umbrella agreement by 2/15 2006 and substantive agreements by 5/1.”
In an interview this month, Stutler said he talked with Durden about the CSX package as many as five other times in 2006, but he denied that it amounted to direct involvement or violated any laws.
The purpose of the Jan. 20 meeting was to move the CSX talks forward, he said. They had started in late 2005, but slowed after some personnel changes at CSX.
“I didn’t have a clue on some of these issues,” Stutler said. “I perceived Earl Durden was an expert on rail. David Brown was a very good negotiator. We were trying to kick things forward.”
Stutler said he didn’t know much about Durden before that. “To be honest, I didn’t even know what he did in the rail industry.”
Durden didn’t respond to repeated calls for comment.
Part Of The Package
In early 2006, when Durden met with Stutler and Ward on the CSX deal, he had just sold 14 of his short lines to Genesee & Wyoming Railroad for $243 million. The Connecticut-based company operates railroads across the country, leasing many from CSX. In its most recent annual reports, it named CSX, based in Jacksonville, as a major source of acquisition, investment and lease opportunities.
The railroads that Durden sold in 2005 were taken over by a Genesee & Wyoming subsidiary called Rail Link, based in Jacksonville.
Durden continued to serve as chairman of his Panama City-based company, Rail Management Corp. He left the transportation commission last year, after eight years.
Even if Durden is technically in the clear, his involvement with the CSX deal and the plan that funded his railroad is “very disturbing,” said state Sen. Paula Dockery, R-Lakeland, who has questioned how the CSX deal came together and the company’s plans to send more freight trains through Lakeland.
“DOT doesn’t seem to get it that, morally, this isn’t the way they should be behaving,” she said. “It seems like we’re getting into a slippery slope as to what does and does not constitute a conflict of interest.”
Durden is one of several railroad owners and executives who were insiders in the DOT planning process in 2005, when legislation championed by Bush set aside hundreds of millions for railroad improvements, The Tampa Tribune reported last month.
Most of the money was set aside for the CSX deal, but about $75 million was for improvements on other railroads, including Durden’s Bay Line, which runs from Panama City north to the Florida-Alabama border, intersecting with an east-west CSX line.
The commission’s executive director, Sally Patrenos, said she was aware that commissioners were not to have financial interests in any DOT contracts. She didn’t think the prohibition applied to Durden in the Bay Line case because the money was part of a larger package for the Port of Panama City.
“My understanding is that the funding going to the rail aspect was going to Port of Panama City and as part of the improvements, they had to improve the rail connections and Bay Line just happened to be the only rail that was accessible to the port.”
Kane said Durden played no role in selecting Bay Line for funding. It was a small piece of a five-year statewide work plan.
State law requires the commission to review that work plan “in depth” before it goes to the Legislature for approval. Patrenos said board members were barred from getting involved with the details of programs. “The only thing we can say is if it’s in compliance or not with laws and policies in the long-range plan.”
Reports to the DOT show, however, that the commission often asks specific questions concerning projects, such as which ones are considered significant enough to warrant priority funding. The commission has a range of other responsibilities that gives it authority over the state DOT. It helps select the head of the department, and it performs regular evaluations of the department’s management, operations and finances.
State Rep. Rich Glorioso, R-Plant City and chairman of the House Infrastructure Committee, asked whether Durden made his railroad ownership clear when he approved DOT’s spending plan.
“It would be nice to know if he commented on his involvement with a rail company,” Glorioso said. “I would hope that if he had an interest related to his business that he would have identified it.”
Glorioso said he’d known Durden for about seven years and had no reason to question him. “It may be all on the up and up, but it’s the perception it creates. It looks bad,” he said.
Patrenos said she didn’t recall Durden bringing up his rail ownership when he and the other commissioners voted to approve the DOT’s work program in 2005, but she has never doubted his integrity, she said. “He’s one of the most ethical, upright people I have ever known.”
By 2005, Durden was as much a political force as a rail expert. In 1980, after years working for other rail companies, he began buying his own. Over two decades, he acquired more than a dozen small railroads, called short lines, from Arizona to Florida.
Through donations from his companies and immediate family members, he turned his profits into political influence, giving at least $1.1 million to candidates across the country, according to state and federal records going back to 1990.
At least $16,500 went to Jeb Bush’s gubernatorial campaigns.
Durden, 71, is a member of the state finance committee for Republican presidential candidate Mitt Romney, the former Massachusetts governor.
Lawmakers Complain About Secrecy
As the state prepared to sign its $491 million deal with CSX in December, news of the plan emerged, and Dockery and several lawmakers complained about the secrecy that had surrounded it.
The 2005 bill that set aside money for the package made no references to CSX or any other rail company getting money. Details of the proposed rail improvements were tucked into DOT’s five-year work program, which fills hundreds of pages.
A few Orlando-area lawmakers knew where the money was going, but “most of us were led to believe that the influx of money was for the road building backlog,” Dockery said. “This was a deal worked out by the agency and the rail industry,” she said.
The money for the railroads came through a state program that focuses money on the roads, rail corridors and ports considered most important to the state’s economic growth. Durden began pushing for the creation of the program, known as the Strategic Intermodal System, soon after newly elected Gov. Bush appointed him to the commission in 1999. It was adopted by the Legislature in 2003, the year Durden became commission chairman.
Before that, state spending on railroads was restricted mostly to crossing safety. The intermodal system put nearly every privately owned railroad in Florida in line for state tax money, along with the seaports and airports, which are run by public agencies.
For the first time, in 2005, the state’s five-year work plan included hundreds of millions in railroad improvements, including $6 million for Durden’s Bay Line. The plan went to the transportation commission for approval, then to the Legislature.
In June 2005, less than two months after the Legislature signed off, Genesee & Wyoming announced it was buying Durden’s properties, paying $243 million and taking over $1.7 million in debt.
The Bay Line improvements weren’t a substantial factor in the purchase, but the state’s overall investment in rail was, Genesee & Wyoming spokesman Michael Williams said.
And with the money for CSX in place, formal negotiations with Ward and other CSX executives began in late 2005.
When Stutler called Durden, he said, it was only for advice. “He would give me his perspective as a representative of the rail industry,” Stutler said. “He never really negotiated anything.”